Citizens Holding Company (the “Company”) (OTCQX:CIZN) announced today results of operations for the three and six months ended June 30, 2025.

(in thousands, except share and per share data)

Net income for the three months ended June 30, 2025 was $1,848, or $0.33 per share-basic and diluted, a linked-quarter decrease of ($2), or (0.1%), from a net income of $1,850, or $0.33 per share-basic and diluted, for the three months ended March 30, 2025. Net income increased $861, or 87.2%, from net income of $987, or $0.18, per share-basic and diluted for the same quarter in 2024.

Net income for the six months ended June 30, 2025 was $3,700, or $0.66 per share-basic and diluted, a decrease of ($155), or (4.0%), from net income of $3,855, or $0.69, per share-basic and diluted, for the same period in 2024. See supplemental information for additional disclosures.

Second Quarter Highlights

• Total loans held for investment (LHFI), as of June 30, 2025 totaled $817,992 and increase of $14,106, or 1.8%, compared to March 31, 2025, and an increase of $138,769, or 20.4% compared to June 30, 2024.
• Net interest margin (“NIM”) increased 11 basis points (“bps) to 3.08% for the three months ended June 30, 2025 from 2.97% for the three months ended March 31, 2025.
• Credit quality continues to remain solid with total non-performing assets (“NPA”) to loans at 82 bps at June 30, 2025 compared to 66 bps at March 31, 2025. Total non-performing assets increased $1,418, or 26.7%, to $6,733 at June 30, 2025, compared to $5,315 at March 31, 2025, and increased $1,628, or 31.9%, compared to $5,105 at June 30, 2024.
• Allowance for credit losses (“ACL”) to loans was 1.00% at June 30, 2025 compared to 0.95% in the prior quarter and 1.00% the same period a year ago.

Chief Executive Officer (“CEO”) Commentary

Stacy Brantley, President and Chief Executive Officer of Citizens Holding Company stated, “We made significant strides in growing organic profitability during the second quarter. Our efforts remain focused on repositioning the balance sheet through the support of our banking and lending teams and growing our presence in each of our markets. Our banking teams have produced loan growth of 1.8% for the quarter and 20.4% growth or $138,769 over the prior twelve months. Deposit growth for the same periods was 2.9% and 8.2% respectively. Focused efforts to generate new non-interest bearing deposits has produced growth of 12.5% or 32,491 over the same period for the prior year. As can be seen in the expansion of our NIM, loan growth and efforts to gather low-cost deposits are making strong contributions to the Company’s expanding profitability.”

“The Company expanded its NIM by 11 bps over the prior quarter end and by 52 bps over the same period for the prior year. As stated previously, NIM expansion is being driven by loan growth and improvements to the funding mix through expanded non-interest bearing deposit balances. Our pipeline remains solid as we enter the third quarter, and we expect moderate loan growth over the remainder of the year. Our banking team remains focused on growing deposits through strong product offerings, improved technology, and delivering outstanding service to our deposit and treasury clients.”

“Credit metrics remain strong with past dues and non-performing loans well within management established targets. The Company increased its ACL as a percentage of LHFI by 5 bps over the prior quarter-end to 1.00%. Provision for credit losses for the quarter was $489 versus $639 for the prior quarter and $298 for the linked prior year quarter. This reflects the Company’s commitment to strengthen its balance sheet and fund reserves to accommodate loan growth.”

“I am excited to see the efforts of the last 24 months begin to firmly take root and drive expanded profitability. Organic profitability (net of significant one-time gains/(losses)) is up 15.8% over the prior quarter and up 87.2% over the same quarter for the prior year. Organic profitability is up 111.0% for the six months ended June 30, 2025, over the six months ended June 30, 2024. This growth is primarily driven by repositioning of the Bank’s balance sheet, increasing loans as a percentage of total assets, while decreasing investment securities simultaneously. Renegotiation of key service contracts and focus on expense control have made significant contributions as well. These maneuvers are in accordance with the strategic plan set in place by executive management and the Board of Directors. As always, we are focused on driving great culture in support of our bankers and communities and recognize this effort as the key to our future success.”

Financial Condition and Results of Operations

Loans and Deposits

Total loans outstanding, net of unearned income, as of June 30, 2025 totaled $817,992 compared to $803,886 at March 31, 2025 and $679,223 as of June 30, 2024.

Total deposits as of June 30, 2025 were $1,265,573 compared to $1,230,077 at March 31, 2025 and $1,169,570 as of June 30, 2024. The Company continues to focus on core deposit growth to not only fund future loan growth but to also minimize cost of funds. During the quarter, non-interest bearing deposits grew $22,844 or 8.5%, to $292,339 compared to the prior quarter of $269,495 and $32,491 or 12.5%, compared to $259,848 for the same period last year.

Net Interest Income

Net interest income for the three months ended June 30, 2025 was $10,697, an increase of $584, or 5.8%, compared to $10,113 for the three months ended March 31, 2025, and an increase of $2,080, or 24.1%, compared to $8,617 for the three months ended June 30 2024. NIM was 3.08% for the three months ended June 30, 2025 compared to 2.97% for the three months ended June 30, 2024 and 2.56% for the same period in 2024.

The linked-quarter increase in net interest income is primarily a result of the increase in interest income of $262, or 1.5%, coupled with a decrease in interest expense of ($321), or (4.4%), compared to the three months ended March 31, 2025. The increase from the same period ended June 30, 2024 is due to both an increase in interest income of $1,043, or 6.3% and a decrease in interest expense of ($1,037), or (12.9%).

Net interest income for the six months ended June 30, 2025 increased $4,402, or 26.9%, to $20,809 from $16,407 for the same period in 2024. The year-to-date NIM was 3.02% as of June 30, 2025 compared to 2.97% at March 31, 2025 and 2.49% for the same period in 2024.

Net interest income for the six months ended June 30, 2025 increased compared to the prior year due to interest income increasing $3,111, or 9.71%. This increase is primarily the result of interest income on loans, including fees, increasing $5,837, or 27.24%, from $21,424 to $27,261 for the same period.

Credit Quality

The Company’s NPAs to loans was at 82 bps at June 30, 2025 compared to 66 bps at March 31, 2025. Total non-performing assets increased $1,418, or 26.7%, to $6,733 at June 30, 2025, compared to $5,315 at March 31, 2025, and increased $1,628, or 31.89%, compared to $5,105 at June 30, 2024. The increase in NPAs is directly attributable to 1 large relationship becoming non-accrual during the quarter and not indicative of a broader weakening in the loan portfolio.

Net losses were $97 for the six months ended June 30, 2025. Year-to-date net losses to average loans were 0.00% at June 30, 2025 compared to 0.00% at June 30, 2024.

The provision for credit losses (“PCL”) for the three months ended June 30, 2025 was $489 compared to $639 for the linked quarter and $298 for the same period a year ago. The PCL was primarily driven by loan growth coupled with qualitative factor adjustments due to the current economic uncertainty. Additionally, the Company has not observed material deterioration in local CRE valuations that some of the larger central business districts have experienced. The ACL to LHFI was 1.00% both at June 30, 2025 and 2024, and 0.95% at March 31, 2025.

Liquidity and Capital

Given the events within the banking industry during 2023, investment securities portfolios, interest rate risk, liquidity and capital have become much more of a focus for the Company’s management team and Board, regulators and investors. As a result of this, the Company is providing additional information on our liquidity and capital position as of June 30, 2025 to disclose the more traditional and stable nature of the Company’s banking model.

The Company currently has limited reliance on the wholesale funding market. The Company had $-0- in overnight Federal Funds borrowings at June 30, 2025, March 31, 2025, and June 30, 2024. The Company currently has capacity to borrow $205,000 from the Federal Home Loan Bank of Dallas (“FHLB”), approximately $228,000 in brokered deposit availability and $50,000 in availability with our correspondent Fed Funds lines. Additionally, the Company could provide additional collateral to the FHLB to increase the capacity there, should that avenue be needed.

The Company and the Bank remain in a strong capital position and well-capitalized. A comparison of the various regulatory ratios for the Company and the Bank are noted below:

Noninterest Income

Noninterest income decreased for the three months ended June 30, 2025, by ($342), or (11.7%), compared to the three months ended March 31, 2025, and increased by $58, or 2.3%, compared to the same period in 2024.

The decrease quarter-over-quarter is primarily due to other noninterest income decreasing ($378), or (46.2%), primarily driven by a one-time gain from a bank-owned life insurance payment of $254 during the three months ended March 31, 2025.

Noninterest income decreased for the six months ended June 30, 2025, by ($2,860), or (34.2%), compared to the same period in 2024.

The decrease year-over-year is primarily due to other noninterest income decreasing ($4,316), or (77.4)%, driven by the income received as part of the previously disclosed sale-leaseback transaction.

Noninterest Expense

Noninterest expense increased for the three months ended June 30, 2025, by $316, or 3.11%, compared to the three months ended June 30, 2025 and increased by $905, or 9.46%, compared to the same period in 2024.

Noninterest expense increased for the six months ended June 30, 2024 by $1,381, or 7.17%, compared to the same period in 2024.

The increase year-over-year is primarily due to salaries and employee benefits increasing $801, or 8.15% as the Bank continues to place an emphasis on recruiting and retaining talent in strategic markets.

Dividends

The Company paid aggregate cash dividends in the amount of $226, or $0.04 per share, during the six-month period ended June 30, 2025 compared to $1,803, or $0.32 per share, for the same period in 2024.

SELECTED FINANCIAL INFORMATION

SUPPLEMENTAL INFORMATION

NET INCOME, CORE

Citizens Holding Company is a one-bank holding company and the parent company of the Bank, both headquartered in Philadelphia, Mississippi. The Bank currently has locations in fourteen counties throughout the state of Mississippi. In addition to full service commercial banking, the Company offers mortgage loans, title insurance services through third party partnerships and a full range of Internet banking services including online banking, bill pay and cash management services for businesses. Internet services are available at the Bank web site, www.thecitizensbankphila.com. Citizens Holding Company stock is listed on the OTCQX Best Market and is traded under the symbol CIZN. The Company's transfer agent is American Stock Transfer & Trust Company. Investor relations information may be obtained at the corporate website, https://www.thecitizensbankphila.com/investor-relations.

Cautionary Note Regarding Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this release regarding the Company’s financial position, results of operations, business strategies, plans, objectives and expectations for future operations, are forward looking statements. The Company can give no assurances that the assumptions upon which such forward-looking statements are based will prove to have been correct. Forward-looking statements speak only as of the date they are made. The Company does not undertake a duty to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions. The risks and uncertainties that may affect the operation, performance, development and results of the Company’s and the Bank’s business include, but are not limited to, the following: (a) the risk of adverse changes in business conditions in the banking industry generally and in the specific markets in which the Company operates; (b) our ability to mitigate our risk exposures; (c) changes in the legislative and regulatory environment that negatively impact the Company and Bank through increased operating expenses; (d) increased competition from other financial institutions; (e) the impact of technological advances; (f) expectations about the movement of interest rates, including actions that may be taken by the Federal Reserve Board in response to changing economic conditions; (g) changes in asset quality and loan demand; (h) expectations about overall economic strength and the performance of the economics in the Company’s market area; and (i) other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Should one or more of these risks materialize or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

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As can be seen in the expansion of our NIM, loan growth and efforts to gather low-cost deposits are making strong contributions to the Company’s expanding profitability.